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CECL guidebook part 3: Applying the current condition and reasonable and supportable forecasts

August 8, 2019 White Paper 17 min read
Authors:
Ryan Abdoo Brian Franey
In the third guidebook of our CECL series, we take the next step toward using the simpler loss rate methodologies and illustrate how you can apply the current and reasonable forecast adjustments.
Business meeting in conference roomThe Financial Accounting Standards Board (FASB) has allowed a great deal of flexibility when it comes to CECL. Institutions can choose from several different methodologies, ranging in complexity. The regulators have consistently indicated that community institutions don’t need complex models. In our CECL guidebook part 2: Loss rate calculations of the allowance for loan and lease losses, we illustrated several of these less-complex methods.

What’s inside

In this CECL guidebook part 3, we take the next step toward using the simpler loss rate methodologies, illustrating how to apply the current condition and reasonable and supportable forecast adjustments.

Methodology commentary

  • Understanding the current condition and reasonable and supportable forecast adjustments
  • Applying the current condition and reasonable and supportable forecast adjustments
  • Weighted-average remaining maturity (WARM) method
  • Implementation timeline and concluding thoughts

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